Owning a condo is a common aspiration in Singapore. Or a sign that you’re one of the miserable lot with a household income of, say, $12,001 a month – then it’s your only option because you can’t buy a flat. Well don’t panic (because that should come after you learn the price). Here’s how much you better have in that bank account:

For those of you buying ECs, note that you can still get government housing grants (if you meet all the usual qualifying criteria).

Remember that ECs are HDB properties, for the first 10 years. But the key thing to know is that, even though ECs are HDB properties at the start, you cannot use HDB concessionary loans to buy ECs. You will need a bank loan for an EC, just as described below.

The payment breakdown on your FIRST AND ONLY condo, before taxes

Let’s look at the basic costs of buying a condo, if you own no other properties. We’ll also leave out the taxes for now.

Banks are able to loan a maximum of 80 per cent of your condo’s valuation or price (whichever is lower). This is known as the Loan-to-Value (LTV) ratio. The other 15 per cent can be paid through cash, your CPF Ordinary Account (CPF OA) funds, or a combination of the two. The remaining five per cent must be paid in cash.

Assuming the condo costs $1.6 million, this is how the breakdown would look like:

Securing the OTP – $80,000, or five per cent of $1.6 million

Signing the Sales and Purchase (S&P) agreement – $240,000, or 15 per cent of $1.6 million. This can come from your CPF OA, or a combination of cash and your CPF monies.

Upon sales completion, or developer’s request if the condo is still under development – $1.28 million, which will come from the bank

Adding the applicable stamp duties

The list of stampe duties include:

Buyer’s Stamp Duty (BSD)

The BSD is:

– One per cent on the first $180,000 of your property price

– Two per cent on the next $180,000

– Three per cent from $360,000 to $1,000,000

– Four per cent from $1,000,000 onwards.

So if the property price is $1.6 million, the BSD comes to $1,800 + $3,600 + $37,200 = $42,600

The BSD can be paid with cash, CPF, or a combination of the two.

Additional Buyers Stamp Duty (ABSD)

If you are a Singapore Citizen (SC), there is no ABSD as this is your first property.

Singapore Permanent Residents (PRs) pay five per cent ABSD for their first property, and foreigners pay ABSD of 15 per cent.

Mortgage Stamp Duty

This is $500, and can be paid in cash or from your CPF. Some banks subsidise the mortgage stamp duty as a “bonus”.

Property tax

For owner-occupied condos (we assume this is the case for your first property), the tax rate depends on the Annual Value (AV) of your home, as determined by IRAS. The AV is the expected rental income that you could generate from renting out the property every year.

The tax is a tiered system (e.g. nothing on the first $8,000 of AV, four per cent on the next $47,000, six per cent on the next $15,000, and so forth). You don’t really need to crunch the numbers manually, just use the IRAS calculator, once the AV is known.

(If you want to know the AV in advance, ask the property agent, or look at the rental rates of surrounding properties).

We will assume our mass-market condo has an AV of around $42,000, which is quite typical for most suburban condos. This comes to an annual tax of around $1,400.

Other miscellaneous fees

Other fees include conveyancing (the legal paperwork), which costs about $2,000 to $3,000. Depending on the law firm, you may be able to pay this with your CPF.

In addition, you may have to pay a valuation fee of between $300 to $500 (unless the condo is under development, in which case the bank will usually accept the developer’s valuation). This has to be paid in cash, but some banks will subsidise the cost.

There may be other administrative fees such as loan processing, which varies between banks; but these seldom amount to more than $500.

Finally, you need to factor in maintenance fees. This is around $250 to $400 a month for many condos. The amount you pay depends on the size of your unit, and the number of units (the more units there are, the more the maintenance cost is spread out. That’s why some people avoid condos with small numbers of units).

All in, you will need $365,400 set aside for your first condo, before the bank’s financing comes in.

(For those of you who are buying a second condo, follow us on Facebook; we’ll continue this in a follow-up article).

But that’s not all: you also need to make sure your income qualifies you

To get the full 80 per cent LTV, you need to earn enough; just having a few hundred thousand set aside isn’t enough.

All banks follow the Total Debt Servicing Ratio (TDSR) framework. The TDSR restricts your loan repayments to 60 per cent of your monthly income, inclusive of other loans.

For example, say you earn $7,000 a month, and you have personal loans and a car loan that take up $2,000 a month in repayments. Your total home loan repayment is curbed at $4,200 (60 per cent of your monthly income) – $2,000 (your existing debt obligations) = $2,000.

If your home loan repayment woukd exceed $2,000 a month, you will be asked to take less than the full 80 per cent LTV. You’ll have to make up the difference in cash. For example, if the bank only gives you 60 per cent LTV on a $1.4 million condo (inclusive of taxes), you would be facing a downpayment of $560,000.

This is why, in the year before your home loan application, you should always pay down your debts aggressively.

Ouch, that’s a lot of money

It is, but we’ll help any way we can. For example, when it comes to the legal fees, we may be able to find you a cheaper law firm. $1,000 to $1,500 may not seem like much in the context of these numbers; but remember it’s stilla four digit sum. Likewise, we may be able to help you find a bank that won’t rip you off with high administrative fees, or insist you pay for little things like the valuation.

Ryan Ong has been a freelance writer for over 10 years. He has contributed to magazines from Men's Health to Esquire, and has written for numerous personal finance sites. He's been interested in property and mortgages following personal experiences in the last global financial crisis, and believes every family should own their home.